DES MOINES, Iowa (AP) — Iowa lawmakers could take action this week on a bill allowing MidAmerican Energy to seek permission from regulators to move forward with a nuclear power plant, but some are still questioning if the measure would hurt customers.
The measure would allow MidAmerican to ask the Iowa Utilities Board for a rate increase from the company's customers to fund the cost of permitting, licensing, and building a plant. Costs for such a project have been estimated at $2 billion.
A committee vote on the measure was delayed last week, but Senate Commerce Committee Chairman Matt McCoy said he expects to bring it up this week if support doesn't weaken under heavy pressure from opponents.
"There's a lot of lobbying and a lot of activity around the bill and members have the right to look and re-look and re-examine their position," said McCoy, D-Des Moines. "What we've got to do is size it up and make sure everybody is still where they say they are."
The proposal passed the House 68-30 last April but failed to get to the Senate floor.
Under the measure, the utilities board would not be required to follow traditional rate rules or the usual cost recovery methods, which critic claim opens the door for MidAmerican to charge customers rather than fund a significant portion of a project with their own capital.
"It shifts the risk from the shareholder to the ratepayer," said Steve Falck, a clean energy and water lobbyist for the Des Moines-based Environmental Law & Policy Center. "It doesn't matter when the bills would actually come due to the ratepayer. They're going to increase dramatically."
MidAmerican said it will invest the amount needed to build the plant over an 8- to 10-year period.
"Customers will be charged for the financing costs as MidAmerican Energy makes its investment and then return MidAmerican Energy's investment in the plant over its projected life of 40 to 60 years," the company said in a written response to questions.
MidAmerican Energy Holdings Co., the parent company of the Iowa-based electricity and gas utility, is a subsidiary of billionaire Warren Buffett's Berkshire Hathaway Inc. In its 2011 annual report, Berkshire said the holding company contributed $1.2 billion in earnings for the year. The Iowa-based utility posted a profit of $319 million on revenue of $3.5 billion in 2011.
Construction of a nuclear power plant would take a minimum of four years, said Mark R. Schuling, the consumer advocate in the state Justice Department. Schuling is responsible for investigating the legality of rates and practices of Iowa's regulated utility companies.
MidAmerican said construction could take up to 10 years to site, design, license and build. The company said because it could take so long, the state needs to begin now adopting regulations that encourage development of nuclear generation.
If the company decides to build a plant, it would first take a proposal to the utilities board. In another step, it would outline the costs and planned charges to customers to recover those costs.
The board would need to approve each step.
The company then would go before the Nuclear Regulatory Commission to get certification and a license to proceed. As the process moved along MidAmerican would go before the state board each year to outline its costs for the next year and a plan for billing customers, Schuling said.
Opponents of the measure before lawmakers argue it would let the utilities board allow MidAmerican to recover costs even if the plant isn't completed, but Schuling said that could happen now. The only change under the proposed bill would be that a utility company could begin collecting some of the money sooner.
McCoy said he's pursing nuclear power because Iowa now gets more than 70 percent of its electricity from coal-burning power plants. Many are decades old and must be upgraded or closed due to regulations limiting pollution.
Iowa could lose as much as 40 percent of its coal generated power in the coming years, McCoy said.
Senate Majority Leader Mike Gronstal said he wants to move forward on a nuclear energy bill but thinks the House version passed last year didn't offer enough consumer protection.
"We'll see what the committee comes up with relative to protecting consumers and if they move the bill forward we'll evaluate it and see whether it's deserving of floor time or not," he said.
Gov. Terry Branstad said in January he'd consider the bill as long as the utilities board ensures projects are in the best public interest.
Groups against the bill have taken a very public and aggressive stance to kill it.
Washington-based Friends of the Earth's recently spent more than $8,000 to run a television ad in Des Moines, Cedar Rapids, and Sioux City citing Japan's Fukushima Dai-ichi plant, where a tsunami knocked out power to the plant, the reactors overheated, exploded and leaked radiation.
Location and other details of the proposed Iowa nuclear power plant haven't been determined.
In 2010, the Iowa Legislature passed a bill allowing for a three-year feasibility study to assess the viability of nuclear generation in Iowa. It gave MidAmerican permission to recover up to $15 million in study costs from its Iowa electric customers.
MidAmerican began collecting in October 2010 at a cost to customers of about $4 per year, which brought in $5.2 million.